Targa Resources (TRGP) PT Raised to $145 at JPMorgan, 'underappreciated growth outlook'

JPMorgan analyst Jeremy Tonet raised the price target on Targa Resources (NYSE: TRGP) to $145.00 (from $140.00) while maintaining a Overweight rating.

The analyst comments "After speaking with the company and marking to market commodity prices, we model a $936mm 2Q24 adj EBITDA result. Messaging on our call built off constructive management commentary at our JPM EPR conference around better than initially expected Permian inlet volume growth following conservative commentary on the May call given Permian gas takeaway tightness. This strength should carry through the remainder of 2024 and into 2025. Our 2024 full year estimate now stands at $3,925mm, above the upper end of the $3.7-$3.9bn adj EBITDA range. For G&P, we model a $564mm quarter contribution given the bullish volume commentary and contribution from the Roadrunner II plant, which entered service near the back half of the quarter. TRGP was able to bring back Greenwood earlier than expected in early June. On the 1Q call, management noted downtime on the plant would not significantly impact Midland volumes in 2Q and guided to ~$10mm in repair costs related to the incident. L&M lands at $501mm after factoring a roughly half quarter contribution from Train 9 (entered service in May), downstream uplift from Permian growth, and slight marketing uplift from wide Waha differentials (pipeline capacity to sell gas into premium markets). On the call, we look for updated thoughts on the 2024 adj EBITDA guide, specifics on volume growth expectations through 2025, and latest processing plant needs. We also expect management to reiterate a disciplined capital allocation approach, including still opportunistic buy backs at current levels given an underappreciated growth outlook. All in, the $936mm 2Q24 adj EBITDA JPMe tracks above the $921mm Street Median and we see upside risk to our estimate given management confidence. We lift out PT to $145 from $140 and reiterate our OW rating."

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